What Happened?
A number of stocks fell in the morning session after the U.S. administration announced a sharp escalation in trade tensions by threatening new tariffs on Canada.
The wider market sentiment turned negative after the White House announced plans to impose a 35% tariff on Canadian imports, sparking renewed fears of a trade war. This news prompted a sell-off across major U.S. indexes, including the S&P 500 and the Dow Jones Industrial Average, as investors grew concerned about the potential economic impact of escalating protectionist policies. The healthcare sector is especially vulnerable to such tensions due to its deeply integrated supply chains with Canada for pharmaceuticals and medical devices, meaning increased costs and potential disruptions.
Additionally, ongoing U.S. policy headwinds aimed at lowering drug prices and specific corporate challenges, like those faced by UnitedHealth Group, further compounded the sector's decline. As a result, the Health Care SPDR ETF (XLV) fell 1.0%, underperforming even as major indices pared some losses.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Outpatient & Specialty Care company U.S. Physical Therapy (NYSE: USPH) fell 3.2%. Is now the time to buy U.S. Physical Therapy? Access our full analysis report here, it’s free.
- Healthcare Technology for Providers company Evolent Health (NYSE: EVH) fell 3.4%. Is now the time to buy Evolent Health? Access our full analysis report here, it’s free.
- Drug Development Inputs & Services company Charles River Laboratories (NYSE: CRL) fell 3%. Is now the time to buy Charles River Laboratories? Access our full analysis report here, it’s free.
- Therapeutics company Moderna (NASDAQ: MRNA) fell 3%. Is now the time to buy Moderna? Access our full analysis report here, it’s free.
- Surgical Equipment & Consumables - Specialty company Intuitive Surgical (NASDAQ: ISRG) fell 3.1%. Is now the time to buy Intuitive Surgical? Access our full analysis report here, it’s free.
Zooming In On Evolent Health (EVH)
Evolent Health’s shares are extremely volatile and have had 40 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
Evolent Health is down 2.9% since the beginning of the year, and at $11.16 per share, it is trading 66.1% below its 52-week high of $32.97 from August 2024. Investors who bought $1,000 worth of Evolent Health’s shares 5 years ago would now be looking at an investment worth $1,438.
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